Financial Results for the Third Quarter Ended July 31, 2015
[Japan GAAP] (Consolidated)
Date:

September 2, 2015

Company Name and Code:

Tomoe Engineering Co., Ltd. and Subsidiaries - 6309
(URL: http://www.tomo-e.co.jp/index_e.html)
stStock exchange listing:

1 Section, Tokyo Stock Exchange

Head Office:5-15, Kitashinagawa 5-chome, Shinagawa-ku, Tokyo, Japan

President:

Hitoshi Yamamoto

Investor Relations Contacts:

Toshiaki Yakura, Director, General Manager of Accounting Division, Tel: (03) 3442-5127

Date to report Quarterly Consolidated Financial Statement: September 11, 2015
Date for Dividend Payment:

Not applicable to this financial quarter

Preparation of Supplementary Explanatory Materials for Quarterly Operating Results: Not prepared
Briefing Session for Quarterly Operating Results: Not planned* Any fractional sums less than one million (or one thousand) yen are disregarded
1. Consolidated Financial Data for the Third Quarter Ended July 31, 2015
(1) Results of Operation (Consolidated)

Quarter Ended July 31, 2015
Quarter Ended July 31, 2014

(Percent: Change from the same quarter of the previous year)
Net Sales
Operating Income
Ordinary Income
Millions ofMillions ofMillions of
Yen
Percent
Yen
Percent
Yen
Percent
28,923
-1.3
680
-12.0
1,016
0.8
29,307
5.0
773
-14.1
1,009
-0.6
Net Income

Quarter Ended July 31, 2015
Quarter Ended July 31, 2014

Millions of
Yen
775
733

Percent
5.8
25.1

Net Income per Share

Fully Diluted Quarterly
Net Income per Share

Yen
75
77.
47
73.

Yen
-

(Note) Comprehensive income
Third Quarter ended July 31, 2015: 1,057 million yen (26.4%)

Third Quarter ended July 31, 2014: 836 million yen (-28.5%)(2) Financial Condition (Consolidated)

Quarter Ended July 31, 2015
Year Ended October 31, 2014

Total Assets (A)(Millions of Yen)
32,79133,817

Net Assets (B)(Millions of Yen)
25,01923,943

Net Assets Ratio(B) / (A) (Percent)
76.3
70.8

(Reference) Net assets
Third Quarter ended July 31, 2015: 25,019 million yen

Year Ended October 31, 2014: 23,943 million yen

2. Dividend Status(Record Date)
Year Ended October 31, 2014
Year Ending October 31, 2015
Year Ending October 31, 2015 (Prospect)First
Quarter-Interim
Term
50
22.
50
22.

Annual Dividend (Yen)Third
End ofQuarter
Fiscal Year
50
22.
50
22.

(Note) Revisions since the most recently released dividend projection: None

Annual
00

45.

00

45.

3. Forecast for Earnings for the Year Ending October 31, 2015 (Consolidated)(Percent change from the previous Full Business Year)Net Sales
Operating Income
Ordinary Income(Millions of Yen) (Percent) (Millions of Yen) (Percent) (Millions of Yen) (Percent)
Full Business Year40,370
-0.8
1,280
0.5
1,500
-7.9
Net Income
Net Income per Share(Millions of Yen) (Percent)
Yen
Full Business Year
1,030
-6.6
103.22(Note) Revisions since the most recently released dividend projection: None
Notes(1) Significant changes in subsidiaries during this period (changes in specific subsidiaries involving changes in thescope of consolidation): None
Number of new subsidiaries: __(Company names):
Number of eliminated subsidiaries: __(Company names):(2) Adoption of simplified accounting method and the specific accounting method: None
(3) Changes of the principles, procedures, and representation of the accounting policies
1) Change due to revision of accounting standard: Existing2) Other changes than the above 1): None
3) Change in accounting estimates: None
4) Retrospective restatements: None
For more information, please refer to the supporting data on page 4, (3) Changes in accounting principles,changes in accounting estimates and retrospective restatements(4) Number of outstanding shares (Common stock)1) Number of outstanding shares as of quarter-end and year-end (including treasury stocks)
At July 31, 2015: 10,533,200 shares

At October 31, 2014: 10,533,200 shares

2) Number of treasury stocks as of quarter-end and year-end
At July 31, 2015: 554,667 shares

At October 31, 2014: 554,667 shares

3) Number of average shares (accumulated quarterly total)
At July 31, 2015: 9,978,533 shares

At July 31, 2014: 9,978,577 shares*Disclosure concerning status of implementation of quarterly review procedure
This quarterly earnings report is exempt from the quarterly review procedure based on the Financial Instruments
and Exchange Act. At the time of disclosure of this quarterly earnings report, the Company has not completed aquarterly review procedure based on the Financial Instruments and Exchange Act.
*Explanations for appropriate use of the earnings forecast and other special instructions
The forward-looking statements such as a forecast of our financial results described herein are based on theinformation currently available to us and certain assumptions that we believe are reasonable. Actual results could
differ materially due to various factors. Please refer to the Financial Results for the Quarter (Attachments) on page 3,(3) [Analysis of Future Forecast on Consolidated Earnings Forecast] of 1. [Qualitative Information on Quarterly
Consolidated Operating Results] for the operating results forecast.

Table of Contents (Supporting Data)

1. Qualitative Information on Quarterly Consolidated Operating Results...................................................................2(1) Analysis of Operating Results................................................................................................................................2(2) Analysis of Financial Condition..............................................................................................................................3(3) Analysis of Future Forecast on Quarterly Consolidated Earnings Forecast.......................................................3
2. Matters Concerning Summary Information (Notes)...........................................................................................4(1) Changes to material subsidiaries during the consolidated cumulative third quarter..................4(2) Application of special accounting method in the preparation of quarterly consolidated financial
statements......................................................................................................................................4(3) Changes in accounting principles, changes in accounting estimates and retrospective restatements...4(4) Additional Information..............................................................................................................................4
3. Quarterly Consolidated Financial Statement...........................................................................................................5(1) Quarterly Consolidated Balance Sheet. ................................................................................................5(2) Quarterly Consolidated Statements of Income & Quarterly Consolidated Statements of Comprehensive
Income...................................................................................................................................... 7
Quarterly Consolidated Statements of Income.....................................................................................................7
Quarterly Consolidated Statements of Comprehensive Income.........................................................................8(3) Notes for Quarterly Consolidated Financial Statements………………………………………………..9(Note for premise of going concern)……………………………………………………………...9(Notes for significant changes in shareholder’s equity)…………………………………………...9(Segment information) ………………………………………………………………………………...9
4. Overseas Net Sales (Supplemental Information)...................................................................................................10

1

1. Qualitative Information on Quarterly Consolidated Operating Results(1) Analysis of Operating Results
During the consolidated third quarter under review, Japan’s economy maintained a gradual recovery trend that was
driven by several factors, including a rising trend in capital investment supported by an improvement of corporate
earnings, and a brisk movement in personal consumption against the backdrop of an improved household income
and employment. More recently, the pace of the recovery in Japan is tapering off with the decline in exports andpersonal consumption. Overseas, even as the U.S. economy maintained its recovery trend, conditions remained
opaque because of the weakness in growth evident in the economies of newly developing countries including China,
and negative factors included the adverse effects of a slump in crude oil prices and the Greek debt problem inEurope.
Given these circumstances, net sales for the Tomoe Engineering Group for the consolidated third quarterslipped 1.3% from the same period last year to 28,923 million yen. In the Machinery & Equipment Business,
net sales for domestic public sector demand and overseas net sales of equipment and works, components andrepair services were off, while in the Chemical Products Business net sales for the domestic plastics sector andfine chemicals sector also decreased. With respect to earnings during the period, operating income was 680
million yen, 12.0% down from the same period one year earlier, reflecting the decrease in total net sales in bothbusinesses. On the other hand, ordinary income was 1,016 million yen, 0.8% up from the same period of the prioryear, thanks to the contribution from an increase in foreign exchange gains. A gain on sales of investment
securities and other assets, which is reported in extraordinary income, as well as a decrease in taxes as a result of
the revaluation of deferred tax assets and liabilities in conjunction with the reduction of the normal effective statutory
tax rate as part of the fiscal 2015 tax reform, served as additional factors boosting net income. As a result, net
income for the period was 775 million yen, 5.8% up from the same period of the prior year.
Operating results by segment were as follows.
(Machinery & Equipment Business)
In the Machinery & Equipment Business, consolidated net sales for the year-to-date period were 6,401 million yen,
1.3% down from the same period last year. Although overall net sales for domestic private sector demandremained strong, net sales of machinery, equipment and works and components and repair services for domestic
public sector demand as well as net sales of equipment and works and components and repair services for overseas
markets declined.
From an earnings aspect, because of the decline in net sales of the entire Machinery & Equipment Business, which
was alleviated only by the net sales of machinery for high-margin overseas markets, mainly in North America, during
the first half of the fiscal year, the operating loss was 99 million yen, or nearly the same level as reported in the same
period one year ago.
(Chemical Products Business)
In the Chemical Products Business, sales in the industrial materials sector for additive for use in aluminum alloy, andhousing and construction applications, sales in the electronics materials sector of transport trays for semiconductor
manufacturing applications, and sales of commodity plastics in Hong Kong remained strong, but sales in the plastics
sector and the fine chemicals sector for the domestic market decreased. As a result, consolidated net sales for the
year-to-date period were 22,522 million yen, 1.3% down from the same period one year ago.
With respect to earnings during the period, operating income was 780 million yen, 10.8% down from the same
period one year earlier. Factors behind this performance included the decline in net sales of the entire Chemical
Products Business, and the declining profitability because of a contraction in sales in the plastic compounding
business in Shenzhen, China.
2(2) Analysis of Financial Condition
Total assets as of the end of the consolidated third quarter under review were 32,791 million yen, down 3.0% or
1,026 million yen from the end of the previous consolidated fiscal year. This mainly reflected an increase of 560
million yen in inventory, an increase of 774 million yen in asset for retirement benefits, a decrease of 364 million yen
in cash and deposits, and a decrease of 1,993 million yen in notes and accounts receivable–trade.
Liabilities were 7,771 million yen, down 21.3% or 2,102 million yen from the end of the previous consolidated fiscal
year, mainly because of a decrease of 814 million yen in notes and accounts payable-trade, a decrease of 527
million yen in income tax payable, a decrease of 295 million yen in advances received, and a decrease of 345
million yen in provision for Bonuses.
Net assets stood at 25,019 million yen, 1,075 million yen or 4.5% up from the end of the previous consolidated fiscal
year. This mainly reflected an increase of 793 million yen in retained earnings and a 204 million yen increase in thetranslation adjustments account.
As a result of the above changes, the equity ratio at the end of the consolidated third quarter under review
rose by 5.5 point compared with the end of the previous consolidated fiscal year to 76.3%.
(3) Analysis of Future Forecast on Quarterly Consolidated Earnings Forecast
There are no revisions to the consolidated earnings forecast figures for the fiscal year ending in October 31, 2015that were announced in the “Announcement of Amendment to Earning Forecast” released on May 29, 2015.

3

2. Matters Concerning Summary Information (Notes)(1) Changes to material subsidiaries during the consolidated cumulative third quarter:
There are no pertinent matters to report. However at the Board of Directors meeting held on February 27, 2015,
Interstella Plastics (Shenzhen) Co., Ltd., a specified subsidiary, approved a resolution to dissolve and is currently inliquidation.
(2) Application of special accounting method in the preparation of quarterly consolidated financial statements:
There are no pertinent matters to report.
(3) Changes in accounting principles, changes in accounting estimates and retrospective restatements:(Application of the Accounting Standard for Retirement Benefits)
Beginning from the first quarter consolidated accounting period, the Company has applied the AccountingStandard for Retirement Benefits (Accounting Standards Board of Japan (ASBJ) Statement No. 26, referred to below
as “the Retirement Benefit Accounting Standard”) and the Implementation Guidance on Accounting Standard for
Retirement Benefits (ASBJ Guidance No. 25, referred to below as “the Retirement Benefits Implementation
Guidance”) under the provisions in the main clauses of Article 35 of the Accounting Standard for Retirement
Benefits and Article 67 of the Guidance on Accounting Standard for Retirement Benefits. The Company has
revised its calculation methods for retirement benefit obligations and service costs, and together with changing
its method for attributing projected retirement benefits to periods from the straight-line basis to the benefit
formula basis, also has revised its method for determining the discount rate, from a method based on thenumber of years approximate to the expected average remaining working lives of employees, to a method thatuses a single weighted average discount rate reflecting the estimated retirement benefit payment periods andamount per each estimated retirement benefit payment period.
To apply the Accounting Standard for Retirement Benefits, the Company has recognized the effect of thisrevision to its calculation methods for retirement benefit obligations and service costs by adjusting the balanceof retained earnings at the beginning of third quarter consolidated accounting period, in accordance with thetransitional provisions set forth in paragraph 37 of the Accounting Standard for Retirement Benefits.
As a result, net defined benefit assets increased by ¥725,010,000 yen, and retained earnings increased by¥466,457,000 yen, as of the beginning of the third quarter consolidated accounting period. The effect of thischange on third quarter consolidated accounting period earnings is not material.
(4) Additional information(Effect of revisions to the corporate tax rate)
With the promulgation of the Act for Partial Revision of the Local Tax Act (Act No. 2 of 2015) and the Act for Partial
Revision of the Income Tax Act Etc. (Act No. 9 of 2015) on March 31, 2015, Japan’s corporate tax rate and businesstax rate will be reduced in the consolidated fiscal year beginning on or after April 1, 2015. In conjunction with thischange, the statutory effective tax rate used to calculate deferred tax assets and deferred tax liabilities will be revised
from 35.64% applied in the past to 33.06% for temporary differences expected to be eliminated in the consolidated
fiscal year that begins on November 1, 2015, and to 32.26% for temporary differences expected to be eliminated in
the consolidated fiscal years that begin from November 1, 2016.
As a result, deferred tax liabilities (the amount after deducting deferred tax assets) have been reduced by
113,587,000 yen. In addition, income taxes-deferred have been reduced by 102,652,000 yen.

4

3. Quarterly Consolidated Financial Statement(1) Quarterly Consolidated Balance Sheets (Third Quarter)(Thousands of Yen)
End of Previous YearEnd of Third Quarter(October. 31, 2014)(July 31, 2015)

AssetsCurrent Assets
Cash and Deposits

5,661,622

5,297,404

Notes and Accounts Receivable-Trade

14,321,437

12,327,750

Merchandise and Finished Goods

2,834,556

2,928,198

Work in Process

1,193,440

1,447,790

Raw Materials and Supplies

772,969

985,650

Deferred Tax Assets

579,233

284,798

Others225,244665,335-5,251-3,57025,583,252

23,933,358

2,742,339

4,480,824

Accumulated Depreciation-1,533,884-1,527,122

Buildings and Structures, Net

1,208,455

2,953,702

Machinery, Equipment and Vehicles

4,045,863

4,131,309-3,346,731-3,499,277

699,131

632,032

930,711

1,938,805

Construction in progress

2,581,210-

Others1,102,854

1,125,990

Accumulated Depreciation-977,538-998,771

Others, Net

125,316

127,2195,544,824

5,651,758
388,101

Allowance for Doubtful Accounts
Total Current Assets
Noncurrent Assets
Property, Plant and Equipment
Buildings and Structures

Accumulated Depreciation
Machinery, Equipment and Vehicles, Net
Land

Total Property, Plant and Equipment
Intangible Assets

451,969

Investments and Other Assets
Investment Securities

1,255,543

1,263,542

Guarantee Deposits

243,293

83,932

Net Defined Benefit Assets

596,943

1,371,022

Deferred Tax Assets

36,616-

Others

128,527

122,067

Allowance for Doubtful Accounts-22,995-22,685

Total Investments and Other Assets

2,237,928

2,817,879

Total Noncurrent Assets

8,234,723

8,857,739

Total Assets

33,817,976

32,791,098

5

(Thousands of Yen)
End of Previous YearEnd of Third Quarter(October. 31, 2014)(July 31, 2015)

Liabilities and Net Assets
Liabilities
Current Liabilities

5,970,933

5,156,331

Accounts Payable-Others

535,396

479,122

Income Taxes Payable

543,046

15,261

Advances Received

431,020

135,351

Provision for Bonuses

731,676

386,621

Provision for Directors' Bonuses

36,90031,161

Allowance for Product Warranty

223,618

118,589

Others

305,463

202,9778,778,056

6,525,416

Noncurrent Liabilities
Provision for Directors' Retirement Benefits

18,6805,460

Net Defined Benefit Liabilities

48,64650,432

1,028,769

1,190,545

Total Noncurrent Liabilities

1,096,096

1,246,437

Total Liabilities

9,874,153

7,771,854

Capital Stock

1,061,210

1,061,210

Capital Surplus

1,483,410
21,267,920

1,483,410
22,061,126-363,591-363,591

Total Shareholders’ Equity

23,448,949

24,242,155

Accumulated Other Comprehensive Income
Valuation Difference on Available-for-Sale
Securities
Deferred Gains or Losses on Hedges

305,484

383,715

1,272

530

Foreign Currency Translation Adjustment

311,609516,503

Total Adjustment on Net Defined Benefit-123,493-123,661

Total Accumulated Other Comprehensive Income

494,873

777,088

Total Net Assets

23,943,822

25,019,244

Total Liabilities and Net Assets

33,817,976

32,791,098

Notes and Accounts Payable-Trade

Total Current Liabilities

Deferred Tax Liabilities

Net Assets
Shareholders’ Equity

Retained Earnings
Treasury Stock6

(2) Quarterly Consolidated Statements of Income & Quarterly Consolidated Statements of Comprehensive
IncomeQuarterly Consolidated Statements of Income (Third Quarter)(Thousands of Yen)
Third Quarter Ended

Third Quarter Ended

July 31, 2014

July 31, 2015

Net Sales

29,307,351

28,923,701

Cost of Sales

23,798,779

23,372,833

5,508,571

5,550,867

4,735,198

4,870,071

773,372

680,796

Interest Income

13,942

12,031Dividends Income

122,252

25,860Rent Income

7,212

5,224

Foreign Exchange Gains

77,244

288,946

Others

37,88923,846

258,540

355,909

Interest Expenses

5,246

1,065

Commission Paid

8,719

8,743

Sales Discount

4,212

4,262

Others

4,374

5,672

Total Non-Operating Expenses

22,553

19,744

Ordinary Income

1,009,360

1,016,962

Gain on Sales of Noncurrent Assets-

27,420Gain on Sales of Investment Securities-

58,703

145,132-

145,132

86,124

Loss on Retirement of Noncurrent Assets

6,385

-

Loss on of Sales Noncurrent Assets

2,034

-

8,420

-

1,146,073

1,103,086

Income Taxes-Current

297,252

115,631

Income Taxes-Deferred

123,807

211,672

421,059

327,303

725,013775,782-8,089-733,102775,782

Gross Profit
Selling, General and Administrative Expenses
Operating Income
Non-Operating Income

Total Non-Operating Income
Non-Operating Expenses

Extraordinary Income

Gain on Negative Goodwill
Total Extraordinary Income
Extraordinary Expenses

Total Extraordinary Expenses
Income before Income Taxes and Minority Interests

Total Income Taxes
Income before Minority Interests
Minority Interests in Income or Loss (-)
Net Income

7Quarterly Consolidated Statements of Comprehensive Income (Third Quarter)(Thousands of Yen)
Third Quarter Ended

Third Quarter Ended

July 31, 2014

July 31, 2015

725,013775,782

51,23378,231

Deferred Gains or Losses (-) on Hedges

92

-741

Foreign Currency Translation Adjustment

60,453204,893--168

111,779

282,215

836,793

1,057,997

833,896

1,057,997

2,896

-

Income before Minority Interests
Other Comprehensive Income
Valuation Difference on Available-for-sale Securities

Net Defined Benefit
Total Other Comprehensive Income
Comprehensive Income(Breakdown)Comprehensive Income attributable to Owners of the
ParentComprehensive Income attributable to Minority
Interests8

(3) Notes on Quarterly Consolidated Financial Statements(Note for premise of going concern)
There are no pertinent matters to report.
(Notes for significant changes in shareholder’s equity)
There are no pertinent matters to report.
(Segment Information, etc.)
Third Quarter Ended July 31, 2014
1 Information Pertaining to the Amount of Net Sales or Net Loss of Each Reporting Segment(Thousands of Yen)
Reported Segment
Machinery & Equipment
Business

Chemical Products
Business

Net Sales
Net Sales to UnaffiliatedCustomers
Internal Net Sales among
Segments or AmountTransferred

6,487,575

22,819,776

29,307,351

29,307,351

-

-

-

-

Total

6,487,575

22,819,776

29,307,351

29,307,351

Segment Profit or Loss (-)-101,461

874,834

773,372

773,372

Total

Grand Total(Note) The total amount of segment profit is identical to the operating income reported on the Quarterly Consolidated Statements of Income.

2 Information Concerning Impairment Loss on Noncurrent Assets, Goodwill, and Other Items by Reporting Segment(Material gain on negative goodwill)
The Tomoe Engineering Group had a gain on negative goodwill in the Chemical Products Business in conjunction withthe acquisition of the stock of Interstella Co., Ltd., a consolidated subsidiary of Tomoe Engineering, which was owned
by another company. The reported amount of the gain on negative goodwill in the consolidated Third Quarter underreview as a result of this acquisition was 145,132,000 yen.

Third Quarter Ended July 31, 2015
1 Information Pertaining to the Amount of Net Sales or Net Loss of Each Reporting Segment(Thousands of Yen)
Reported Segment
Machinery & Equipment
Business

Chemical Products
Business

Net Sales
Net Sales to UnaffiliatedCustomers
Internal Net Sales among
Segments or AmountTransferred

6,401,112

22,522,588

28,923,701

28,923,701

-

-

-

-

Total

6,401,112

28,923,701

28,923,701

Segment Profit or Loss (-)-99,578

22,522,588
780,375

680,796

680,796

Total

Grand Total(Note) The total amount of segment profit is identical to the operating income reported on the Quarterly Consolidated Statements of Income.

9

4. Overseas Net Sales (Supplemental Information)
Third Quarter Ended July 31, 2014

(Thousands of Yen)

I. Overseas Net Sales
II. Consolidated Net Sales
III. Ratio of Overseas Net Sales to Consolidated Net Sales (%)

Asia
4,178,698

Other Regions
689,038

Total
4,867,737－－

29,307,351

14.3

2.4

16.6

(Notes)1. Areas including countries or regions are determined based on their degree of geographical proximity.
2. Main countries or regions included in the areas:(1) Asia: China, Korea, Taiwan and Indonesia(2) Other regions: America and Europe
3. Overseas net sales are sales of our company and subsidiaries made in countries and regions other than Japan.
Third Quarter Ended July 31, 2015

(Thousands of Yen)

I. Overseas Net Sales
II. Consolidated Net Sales
III. Ratio of Overseas Net Sales to Consolidated Net Sales (%)

Asia
3,712,590

Other Regions
1,674,467

Total
5,387,058－－

28,923,701

12.8

5.8

18.6

(Notes)1. Areas including countries or regions are determined based on their degree of geographical proximity.
2. Main countries or regions included in the areas:(1) Asia: China, Korea, Taiwan and Indonesia(2) Other regions: America and Europe
3. Overseas net sales are sales of our company and subsidiaries made in countries and regions other than Japan.

10